So, You Want to Take Your Company Public?

Initial Public Offerings (IPOs) can be the biggest decision a company will make and it does not come without its fair share of obligations and risk.

In 2023, there was a 42% increase in the number of IPOs on the US exchange compared to 2022 as reported by EY(1). The market is feeling the same level of optimism in 2024 and beyond. So, if you are a company that is considering going public, we are here to help you succeed. 

Keep reading to understand more about the IPO process - the good, the bad & the ugly - along with its requirements, benefits, and our governance readiness playbook. 

What is an IPO and what are some of the obligations? 

An Initial Public Offering, also known as a stock launch, is when companies sell shares to institutional and retail investors publicly for the first time(2).  

IPOs can be the next leg of the hard-earned journey of a company that has created a successful and unique business model and is entering a new stage of growth by becoming publicly traded. 

Typically, the decision to enter the public market comes after companies reach a certain revenue growth (typically $100M or more), and establish a growth path as well as a governance structure to meet the obligations of going public. 

Some of these obligations include:

• Meeting all the requirements of the stock exchanges you’re listing on, as well as the Securities and Exchange Commission (SEC).
• An established corporate governance framework - including ESG considerations and Sarbanes-Oxley Act of 2002 (SOX) compliance.
• Disclosure of financial statements, contracts, customers & suppliers, etc.
• Financial reporting requirements.
  

What are the benefits?

• Increased capital for research and development and the ability to raise more capital in the future.
• Increased visibility, leading to more credibility with investors.
• Employee attraction with enhanced company awareness, branding & the ability to offer competitive compensation packages with your stock.
• Liquidity through public stocks for employees and investors.
• Ability to acquire other companies with public stock.

Some of the world’s biggest and most successful IPOs, like Saudi Aramco, Alibaba, and Softbank, have generated tens of billions of dollars(3).  However, success isn’t guaranteed. Infamous IPO flops that prove that point are WeWork, ETSY, Uber, Casper, and Robinhood(4). 

On the flip side, a flop is typically when the stock price dips below the set opening share price on the first day of trading, and initial valuations are not met. 

However, IPOs typically only fail for a handful of reasons.

• Wrong valuation - the price is set too high to attract investors without real legs to stand on.
• Wrong timing to attempt to go public. 
• Underlying issues with the company’s fundamentals, especially its core processes and governance structure.

IPO readiness

The IPO playbook for your company’s needs

Resources